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A word of caution as open enrollment approaches

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Open enrollment for 2015 health insurance coverage from the government marketplace is proposed to begin Nov. 15. People who plan to shop should understand the rules or risk facing serious consequences down the road.

Granted, the rules were confusing to begin with and have been changed and rearranged with little public explanation or education. Additionally, policies available through have been marketed as providing better coverage at lower subsidized prices than what’s available to most individuals shopping privately or covered through employer-sponsored programs.

Many policies purchased through the Patient Protection and Affordable Care Act (PPACA) websites also qualify for government subsidies for the purchaser. Those subsidies are not available for policies purchased through other means.

That allure, and the public’s failure to understand the rules, is leading many to inadvertently break them, which may result in stiff penalties for individuals and families down the road.

Under the law, employers with 50 employees or more must offer policies that meet or exceed the new PPACA rules which, for instance, require certain preventative measures to be 100 percent covered. Some employees, unhappy with their companies’ offers, are instead purchasing through the marketplace in hopes of a better deal.

That’s a violation of the rules.

The IRS has been collecting data from all employers about who has access to an employer health plan. The IRS, according to information publicly available at this time, will not act on database comparisons that show which individuals with access to employer plans have instead purchased a plan through Obamacare.

That means those individuals will not get an early warning that they’ve violated the rules. The result may be an IRS financial nightmare for those individuals, with the potential for fines, penalties, interest and having to return to the employer policy.

Accountants, financial advisors, insurance agents, and other professional advisors, need to be proactive in advising clients as to the possible benefits as well as the potential negative consequences of PPACA choices. Advisors should complete a significant review of each particular client’s unique circumstances in relation to the legislation and its regulations in order to decide on the best plan of action that will maximize the benefits while avoiding the potential hazards and penalties.    


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